Why do EXW terms matter?
EXW is attractive to sellers because it keeps their obligations and costs to a minimum. For buyers, it means full control over routing, carriers and timing, but also full exposure to transport risk and paperwork from the first moment the goods are collected. Because the seller’s role ends at its own gate, buyers need to understand exactly what they are responsible for before agreeing to EXW terms.
How do EXW terms work in logistics?
The seller prepares the goods and makes them available at the agreed place, usually its factory or warehouse, on the agreed date. The buyer’s carrier collects the goods from that location and takes responsibility for loading, transport, insurance and customs formalities. Risk passes to the buyer once the goods are made available, even if they have not yet been loaded. The seller’s only remaining obligation is to provide the documents the buyer needs for export.
EXW vs. other incoterms
- EXW (Ex Works) – Buyer takes on all responsibility from the seller’s premises; buyer arranges and pays for all transport and clearance
- FOB (Free on Board) – Seller pays to loading port; buyer assumes risk once loaded
- CFR (Cost and Freight) – Seller pays freight to destination port; buyer assumes risk once loaded; buyer buys insurance (sea freight only)
- CIF (Cost, Insurance and Freight) – Seller pays freight and insurance to port; buyer assumes risk once loaded (sea freight only)
- CPT (Carriage Paid To) – Seller pays freight to named destination; buyer assumes risk once handed to first carrier (all modes)
- CIP (Carriage and Insurance Paid To) – Seller pays freight and insurance to named destination; buyer assumes risk once handed to first carrier (all modes)
- DAP (Delivered at Place) – Seller pays all freight and duties to named destination; buyer assumes risk upon arrival at destination
- DPU (Delivered at Place Unloaded) – Seller pays freight and unloads at named destination; buyer assumes risk once goods are unloaded
- DDP (Delivered Duty Paid) – Seller pays all freight and duties to named destination and handles all customs; buyer assumes risk upon arrival with no remaining obligations
Example in practice
A furniture manufacturer in Ljubljana, Slovenia sells 25 wooden dining sets to a retailer in Oslo, Norway under EXW terms. The manufacturer makes the sets available at its factory on Monday morning. The buyer’s haulier collects them, arranges the road and ferry crossing, and handles the transport insurance. The buyer’s agent files the export declaration in Slovenia and the import declaration in Norway, paying Norwegian import VAT on arrival before the sets are released to the retailer’s warehouse.